COURTESY HR BIOPETROLEUM
An algae-based oil factory is being proposed for Maui. Here, a marine algae venture, run by
HR BioPetroleum Inc. and Royal Dutch Shell PLC, is shown in Kailua-Kona.

Proposal seeks fuel boon from blooms

Biodiesel: Maui plant to key on algae

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Hawaii might soon be home to one of the world's first commercial microalgae plants.

Alexander & Baldwin Inc., HR BioPetroleum Inc. and Hawaiian Electric Industries Inc. said yesterday in a tentative agreement that they will develop a commercial microalgae facility on Maui by 2011 to produce an oil used for biodiesel.

Gov. Linda Lingle called the plan "innovative" and said it will help move the state toward a goal of having 70 percent of isle energy come from clean sources by 2030.

Alexander & Baldwin Inc., HR BioPetroleum Inc. and Hawaiian Electric Industries subsidiaries Hawaiian Electric Co. and Maui Electric Co. said yesterday they have signed a tentative agreement to build an algae plant on up to 1,000 acres of agricultural land owned by A&B next to HECO's Maalaea power plant starting in 2011.

It would be one of the first commercial plants of its kind in the world, according to Ed Shonsey, HR BioPetroleum chief executive officer, and adds to several major isle biodiesel projects announced in the past two years.

"It's a very new area in the field of biofuels and alternative energy," Shonsey said. "There are approximately 20 companies in the world that are investigating this approach and of those 20 there are only approximately two that actually have pilot facilities and have demonstrated the ability to do it outside the lab and scale it up, and we are one of those."

The Maalaea project is subject to regulatory approvals and undisclosed project financing, which Shonsey said would come from sources obtained by HR BioPetroleum, some within Hawaii, and possibly A&B. The plant is expected to be profitable within the first year of operation, he said.

The company must also confirm performance data from its two 6-acre pilot facilities in Kona; one for initial strain testing under a partnership with Kona-based biotechnology company Mera Pharmaceuticals Inc., and another for demonstration purposes under a deal announced late last year with Royal Dutch Shell PLC, Europe's largest oil company.

COURTESY HECO
This aerial photo shows Maui Electric Co.'s Maalaea, Maui, power plant, which is adjacent to the Alexander & Baldwin Inc. land where the future microalgae operations will be located.

Algae at the proposed facility would convert carbon dioxide pumped in from HECO's Maalaea plant to a vegetable oil used in biofuels.

The estimated yield of an algae farm is 6,000 to 10,000 gallons of biodiesel an acre a year, more than the 600 gallons an acre produced from palm or jatropha, or 48 gallons an acre from soy beans, Shonsey said.

About 200 acres would be complete by 2011, with an expansion in 200-acre increments over an unspecified amount of time, HECO spokesman Peter Rosegg said.

"None of the other Hawaiian islands uses so much diesel or is so dependent on petrodiesel," Rosegg said. "With so much of their power generation coming from petrodiesel, it's a natural choice to make that the first fuel switching operation."

The Maalaea power plant used 56 million gallons of petroleum diesel last year, or about 85 percent of the combustion generation on Maui. MECO also uses power from a hydroelectric plant in Lahaina and a wind farm in West Maui.

Vegetable oil from the algae would likely be processed into biodiesel at the island's BlueEarth Biofuels LLC plant, slated to produce 120 million gallons of biodiesel a year at full capacity with operations starting in 2010, Rosegg said, although a processor has not been determined. It would then be transported back to Maalaea to be burned for power.

Jeff Mikulina, director of the Hawaii chapter of Sierra Club, said the organization will evaluate the ecological impacts of the plant.

"It is very, very encouraging to see Hawaiian Electric be an early adopter of this technology," he said. "We should be looking for homegrown solutions, and biodiesel from algae very well could be one."

About 25 employees will be hired by HR BioPetroleum to operate the plant, Shonsey said, about half the staff of 40 he plans to have at the company's Kona operations once the construction of the project with Shell is complete in January. No layoffs are expected from A&B with the loss of the sugar cane land, he said.

The project would come online after HECO's 110-megawatt generating unit at Campbell Industrial Park, planned to start operation next year running entirely on biodiesel. In 2006, HECO said it wanted to produce at least 500 megawatts of energy, or about 30 percent of the power generated on Oahu alone, from renewable sources in the next decade.